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Treasury Yield Decline Puts Downward Pressure on Mortgage Rates

By Jeff Ostrowski From The economy is reopening. Americans are getting back to traveling, eating out and going to movie theaters and ballgames. But if you expected the robust recovery to translate to a rapid climb in mortgage rates, think again. The rate on 10-year Treasury bonds—a closely watched metric, and a key benchmark for mortgage rates —dipped below 1.46 percent Thursday. Before the recent retreat, the yield on government bonds rose as high as 1.69 percent in May. The decline in Treasury yields came after a new report showed that the U.S. trade deficit had hit record levels. For mortgage borrowers, the drop in Treasury yields is likely to translate to a downtick in mortgage rates. As a rule of thumb, the 10-year Treasury tracks 150 to 200 basis points above the 30-year mortgage rate. “The response in mortgage rates to moves in underlying Treasury yields tends to …

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